Everyone told Noel Biderman not to start his company, AshleyMadison, an internet dating site for infidelity. His parents, friends, lawyers he'd worked with— all of them said no.
Then his wife finally asked if he was serious about the idea. When he said yes, she gave him the go ahead.
"If you want to test the validity of your relationship, ask your significant other about getting into the infidelity space," Biderman says. "If she stands by you.. you probably have a really solid partnership on your hands."
Nearly 15 years ago, Biderman launched AshleyMadison. Since then he has succeeded in building up a large business and reputation. BusinessWeek once described him as "possibly evil" and Biderman's own company has (perhaps tongue-in-cheek) billed him as "the most hated man on the Internet."
In reality, Biderman, 43, is a mess of contradictions: He is a happily married man from a family of happily married couples running a website to help married people cheat because he believes some societal change is coming.
He poses as a provocateur for Ashley Madison's marketing, but comes off in person as fairly down to earth and self-aware. He often leaves work around 5 p.m. to make it to dinner with his children and jokes that his infidelity service could turn into a family business.
If all goes according to plan, Biderman will soon add one more title to his list: public company CEO. AshleyMadison's parent company confirmed last week that it intends to raise up to $200 million in a public offering in London later this year.
The AshleyMadison IPO will likely be a litmus test for how public investors view a service on the fringes of social norms — even in 2015, when 'disrupting norms' sounds like a good weekend at a dinner party full of startup entrepreneurs. That is part of the reason the company is choosing London over New York for its IPO: the former is less squeamish about the issue of infidelity.
AshleyMadison has faced social rejection before.AshleyMadison has faced social rejection before. It pursued an IPO on the Toronto Stock Exchange in 2011, but forfeited those plans after investors gave it the cold shoulder. This time, AshleyMadison's revenues have topped $100 million annually, it operates in dozens of countries and newer, edgy tech companies like Snapchat and Tinder are receiving tremendous investor interest.
"If those are worth billions and billions of dollars, then what about a company that's been around for years and made more than a billion dollars?" Biderman told Mashable in an interview last week.
Even with all that in place, Biderman still anticipates AshleyMadison having a love/hate relationship with investors.
"I’ve been in meetings where everything is going well and someone storms out. I'll say, 'What's up with them?' Well, their wife just went off with the neighbor," he says. "We are going to be economics plus emotions. That's how our calls are going to go. That's how our valuation will go. We will have more massive swings because of emotions."
Biderman talked to Mashable about the trillion-dollar infidelity business opportunity, why he thinks his company's IPO will make it easier for Snapchat to go public and the feeling that he's not qualified to do anything other than AshleyMadison now. Below is a lightly edited transcript of that conversation.
IMAGE: ASHLEY MADISON
Q&A with Noel Biderman, founder and CEO of AshleyMadison
You run an unusual company, to say the least. Do you have any other business to model yourself after at this point as you look to go public?
I don’t know that there's ever been a company like us. I do get to wake up every morning doing something no man or woman has ever done before. I kind of get up and make it up as I go... When I look at public companies, I'd love to be like Amazon, but I think we are really, truly unique. We were never VC funded. When we finally did get funding, it was to do an IPO that didn’t come together for us — wrong time, wrong place, wrong branding.
Being "really, truly unique" is great when first pitching yourself to the media, but I'd assume it will make it more difficult to explain yourself to Wall Street.
We don't even sit normally within our own vertical. It's different than online dating. When I’ve tried to explain our unique metrics, it has been challenging and it will be challenging... I’ve been in meetings where everything is going well and someone storms out and I'll say, 'What's up with them?' Well their wife just went off with the neighbor. We are going to be economics plus emotions. That's how our [earnings] calls are going to go. That's how our valuation will go. We will have more massive swings because of emotions.
Why go public then? You don't have lots of powerful venture capitalists clamoring for a return on their investment. And it sounds like this next chapter will kind of be a headache.
I’ve tried to attract world-class talent and I'll be honest with you: it isn’t the easiest thing.I’ve tried to attract world-class talent and I'll be honest with you: it isn’t the easiest thing. I think we have built the most phenomenal dating site on the planet. What I would love to do is bring more people to the organization with the appetite to see it be a dominating world player. It's tough when you are a private canadian company... [By going public] you can attract a whole slew of talent and I think this company is worthy of that magnet effect.
So why pursue a public offering this year in particular?
We launched in South Korea [last year], where adultery was illegal. We got blocked, got banned. The government basically interceded on that basis: it's an illegal behavior. Well, then there was a Supreme Court challenge to the whole thing and it turned out the Supreme Court changed its mind and reversed a 63-year-old law. Those are watershed moments in society. We really just felt this was our moment in time.
And think about it: who announced her presidency last week? She could be the first president who is the current spouse of someone who is very publicly unfaithful.And think about it: who announced her presidency last week? She could be the first president who is the current spouse of someone who is very publicly unfaithful. If the most powerful person in the world has lived through infidelity, we will have to start treating it differently.
You mentioned feeling optimistic about AshleyMadison after seeing services like Snapchat receive billion-dollar valuations. Do you think your IPO will make it easier for Snapchat to go public one day?
Yeah for sure. I’ve been the voice for a misunderstood cohort. It's a 1000-year-old narrative we’re trying to overcome. There is a credibility, any CEO will tell you, to a public offering.
Is there a ceiling to the infidelity market? How do you plan to grow your business?
There's a huge trillion-dollar economy that gets built on the back of unfaithfulness — the hotel industry, jewelry, flowers. Maybe there's an opportunity to participate one level deeper in that economy. If these two users want to connect and want to know the most reliable discrete places to do it, why not do those things? If you’re a public company i think they take your phone call.
You've been working on this company now for nearly 15 years now, through plenty of ups and downs. How much longer do you really plan to stick with it?
It was only recently I was joking to my wife that maybe this is a family business [laughs]. I am Mr. Ashley Madison. You can’t type my name in anywhere and not see it. You would think that people would ask me to sit on their boards or speak at [TechCrunch] Disrupt, given my success in this realm, but the shyness when it comes to me is enormous.
I don’t know that there is anything else I am going to be qualified to do. I think I am going to be tied to this thing forever.I don’t know that there is anything else I am going to be qualified to do. I think I am going to be tied to this thing forever.
I think with a deeper bench, I might be able to be less operational. I still get in at 6 in the morning every day and work 365 days a year. Maybe that transition can come over the next half decade.
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